The State Bank of Pakistan Friday asked Exchange Companies to immediately refrain from unhealthy business practices otherwise strict action will be taken against them. After volatile exchange rate in the open currency during the last two weeks, the State Bank Friday called a meeting of Exchange Companies Association Pakistan (ECAP), CEOs and other representatives of Exchange Companies "A" & "B" at State Bank Head Office here to discuss the ongoing dollar rate and other issues related to Exchange Companies.
Pak Rupee against the dollar continues to depreciate as presently the greenback is trading at Rs 104.10 in open currency market up from Rs 103.10 about two weeks ago. During the meeting, Syed Irfan Ali, Executive Director SBP said since the central bank has allowed import of dollar to the exchange companies, dollar rate is increasing day by day and has crossed Rs 104 in the open market. The SBP officials also showed concern over the activities of some Exchange Companies with regard to buying and selling of the US dollar amounting to 2500 and decided to obtain CNIC of each transaction.
In order to curb malpractices forthwith in terms of buying and selling of dollar, the SBP officials proposed that CNIC copy of all customers should be obtained irrespective of the amount of transaction, besides verification of customer through NADRA biometric system to ascertain the genuineness of the transaction. Presently, Exchange Companies are required to obtain a CNIC copy from customer for any over USD 2,500 transaction.
The SBP officials also showed displeasure over the fact that in the past ECAP took no disciplinary action against the Exchange Companies involved in malpractices. They said that it is the responsibility of the ECAP to take action against such companies violating the rules and regulations aimed to promote healthy business practices. During the meeting, the State Bank warned all companies including "A" & "B" category to immediately refrain from unhealthy practices or surrender their licenses to SBP.
The SBP officials made it clear that Exchange Companies, which fail to comply with the SBP rules and regulations, would be dealt with an iron hand and their cases would be referred to the investigating agencies to initiate legal action against the delinquents under the Anti Money Laundering Act 2012. Zafar Paracha, General Secretary ECAP sought some time to streamline things at the end of Exchange Companies. He assured the SBP officials that ECAP will take action against the companies found involved in illegal activities.
He requested the SBP officials to defer issuance of circular for NADRA verification for the time being as it will create more panic in the market resulting in more buying, beside promotion of illegal currency exchange business. Paracha said that ECAP will make efforts to discourage shipment of USD to Peshawar and all exchange companies will be asked to become fair and transparent in their day to day affairs. Malik Muhammad Bostan, during the meeting, informed the SBP officials that dollar demand has surged due to Hajj season and the price trend can be checked from previous year's Hajj season. In addition, a large number of non-filers are buying dollars from the open currency market as the government has imposed 0.3 percent withholding tax on over Rs 50,000 transactions for non-filers. The dollar demand after June 30, 2015 has suddenly increased due to massive buying by non-filers and Hajj flights. Presently, daily dollar demand has surged to 7 to 8 million compared to 2 to 3 million in June this year.